Balance Coin (BLC) collapsed by more than 99% after a suspected exploit connected to 42DAO drained approximately $915,000 from its liquidity pools. This event caused the stablecoin to deviate sharply from its $1 peg, plummeting to an all-time low near $0.0012 on July 22.
Details of the Exploit and Market Impact
Security firms including PeckShield and TenArmor identified two suspicious transactions on the BNB Chain linked to the attack. The first transaction minted around 4.5 million unbacked BLC tokens from a null address, which were then swapped for Binance-pegged USDT and Binance Bitcoin (BTCB) through PancakeSwap V2. A second similar transaction followed, minting an additional 5,900 BLC tokens for further extraction of assets.
This unauthorized minting drastically increased the circulating supply without the protocol’s usual controls. As these tokens flooded decentralized exchange liquidity pools, increased selling pressure caused Balance Coin’s price to crash far below its intended dollar value. At one point, BLC traded at $0.001209, and despite a slight recovery, it remained roughly 99.75% down over 24 hours, with a trading range between $0.001209 and $0.9955 according to CoinMarketCap data.
Balance Coin serves as the algorithmic stablecoin of the Balance Protocol ecosystem managed by 42DAO, which aims to maintain a stable peg to the U.S. dollar on the BNB Chain. As of the latest updates, no official post-incident report from 42DAO has been released despite thorough onchain analyses by the security firms.
The exploit’s estimated impact stands near $915,000 in losses, underscoring vulnerabilities in the token’s minting mechanisms. The rapid depegging highlights risks for holders and users relying on algorithmic stablecoins within decentralized finance environments.
This material is provided for informational purposes only and does not constitute financial advice.
